Cowed by economic woes and corruption, Beijing's leaders slow their reforms

WHEN POWERFUL MEN FLY too close to the sun, two things can happen: they modify their course, or they come crashing down. China's most daring high-flyer, Premier Zhu Rongji, has seemed to defy gravity over the past five years as he pushed his country's economic reforms further and faster than anyone thought possible. To his many admirers at home and overseas, he was the enlightened mandarin who single-handedly could break through the red tape and propel China's economy into the next century. Even Asia's debilitating economic crisis didn't seem to faze Zhu. In March he laid out a program for China to make its state-owned firms profitable, restructure its debt-ridden banking system, halve the bureaucracy and privatize the housing market--all by the year 2000.

But six months later, "Zhu-phoria" has disappeared and there is an unmistakable odor of scorched feathers in Beijing: Zhu has hit his ceiling. With the negative G-force of some 200 million unemployed pulling at him, a sharp decline in exports and foreign investment, a change-resistant culture of corruption, and an unfriendly economic environment in the rest of Asia, Zhu has been forced to reverse or put on hold all his key reform policies. Mounting reports of labor unrest around the country terrified his comrades in the leadership, whose fear of luan--chaos--approaches the phobic. "With no functioning social-welfare net," argues a Chinese economist, Zhu's reforms were "suicidal."

The first hint of backtracking came in July, when the government officially denounced "the wrong trend of selling small state-owned enterprises" because too many workers were being laid off by the new private owners. Instead banks were told to continue making "policy loans" to factories showing losses, in order to keep people at work. So much for bank reform.

The steely hand of control is also reaching back out into the political arena. The upbeat talk of new openness during the Clinton visit in June has fallen silent. Surveillance of dissidents has been increased, and in September police detained activists in four provinces for trying to legally register the China Democratic Party, which would have been the country's first opposition political group.

"Zhu Rongji is a good man, honest, with good ideas," says a mid-level government official in Suzhou, a city 50 miles west of Shanghai. "But even he is too weak to take on all the problems in China." The official then details the extent of corruption, inefficient industry, nepotism and financial chaos that plague his city, a microcosm of the mess China is in.

According to a source close to his family, the Premier is still calm and "far from panicking." A visit to Washington is on the books for next spring. One thing Zhu may have in common with his probable host in the White House: a pair of visibly clipped wings.

Questions

1. What is "Zhu-phoria"? Why has it disappeared?

2. In what ways has the scaling back of planned reforms affected China's economic, social and political arenas?

Answers

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